By Chris Kahn -- AP Energy Writer
NEW YORK (AP) — Retail gasoline prices retreated this week for the first time in nearly two months and benchmark crude prices tumbled about 4 percent.
The World Bank said the global economy would shrink more than previously stated and burgeoning supplies of crude and gasoline finally appeared to grab hold of energy prices that since early May have appeared to shake off market fundamentals.
Benchmark crude for July delivery dropped $2.62 to settle at $66.93 on the New York Mercantile Exchange. The July contract expires later Monday, and most of the trading already has shifted to the August contract, which lost $2.52 to settle at $67.50.
Average retail gasoline prices fell for the first time in 54 days. The national average for pump prices fell 0.3 cents overnight to $2.69 a gallon, according to auto club AAA, Wright Express and Oil Price Information Service.
A gallon of gas jumped by 28.1 cents in the past month as refiners slowed production and consumption increased during the summer driving season. Gas is still $1.383 cheaper than it was the same time last year, when crude was on a historic run toward $150 per barrel.
It should get even cheaper to fill up later this summer, said Tom Kloza, publisher and chief oil analyst at Oil Price Information Service. Gas futures contracts have dropped 10.2 percent since peaking last week, and those falling prices should work their way to filling stations around the country in the next several days.
"I think we'll see price drops every day this week," Kloza said.
Signs of any economic recovery have repeatedly brought large investors into the oil and gasoline markets but on Friday, as gas and crude futures fell, the government reported what looked like an exodus of speculative money betting that prices would continue to rise.
Consumers saw that play out at the pump beginning on April 28, when gasoline prices began an extended rally. While the national average price fell for the first time overnight, consumers in many markets saw prices begin to fall steadily two weeks ago.
Crude prices have doubled since the Federal Reserve in March flooded the economy with more than $1 trillion. The move, which was meant to revive the housing market, weakened the dollar and sent investors looking for safe haven commodities like oil.
Oil executives have maintained that the rising energy prices were more a reflection of investor enthusiasm than market fundamentals. Petroleum consumption is still hovering around a 10-year low in the United States.
With the Fed meeting later this week, investors have started shifting their bets, Alaron Trading Corp. analyst Phil Flynn said.
By Chris Kahn -- AP Energy Writer
"A lot of people are worried that the Fed is going to say 'Enough is enough, we're going to stop printing money. We're going to stop buying back debt,'" Flynn said.
The World Bank said Monday that the global economy would shrink by 2.9 percent this year, much worse than its March prediction for a contraction of 1.7 percent.
"The global recession has deepened," the bank said, adding that economic damage to developing countries "has been much deeper and broader than previous crises."
Geopolitical turmoil over the weekend and on Monday in oil rich regions has done little to stop the slide that began early Friday. Iran carried out its threat to crush opposition protests over its disputed presidential election.
"A year ago the political turmoil in Iran would have sent oil prices through the roof ... but these days markets are calmer," said KBC Market Services in Britain. "This is a situation that needs to be watched closely as Iran exports about 2.2 million barrels a day of crude oil to some significant places — Japan and China stand out."
In other Nymex trading, gasoline for July delivery was down 6.47 cents at settle at $1.8597 a gallon and heating oil lost 5.92 cents to settle at $1.7275 a gallon. Natural gas for July delivery fell 9.9 cents to settle at $3.907 per 1,000 cubic feet.
In London, Brent crude fell $2.21 to settle at $66.98 a barrel on the ICE Futures exchange.
Associated Press writers Pablo Gorondi in Budapest, Hungary, Alex Kennedy in Singapore and Joe McDonald in Beijing contributed to this report.
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